Investing in residential property provides strong capital growth prospects, however, not all properties perform the same, so selection is crucial. Decisive drivers of capital growth include demand, location of property in relation amenities, location of apartment in development, functionality of floor plan and level of renovation.
Residential yields (annual rent as a percentage of property value) range between 3% to 4%, depending on the property type and location. Commercial property such as warehouses, shops and offices, generally provide stronger yields but lower capital growth prospects. Tenants of these assets generally pay the building outgoings which assist in keeping net yields at a higher level. Commercial property yields (annual rent as a percentage of property value) range between 4% to 7.5% depending on the asset.